Valley Gas Prices Drop

September 6, 2008 12:15:38 AM PDT
Not all of the economic news is bad these days. Oil prices and gasoline prices are dropping quickly. One reason they are down is because Californians, like all Americans changed their driving habits, Jose Placencia of Fresno's AAA office says:" We found that consumers have modified their driving behaviors significantly since prices have gone up, everything from driving more economical cars to saving while they are driving on vacation and limiting the amount of miles that they put on their car."

Scott Case and economist with the University of Phoenix says supply and demand is working. "We see that when oil prices went up, fuel prices went up, and the reverse is true that when oil prices fall that gets passed along to the consumer."

Oil prices were at 150 dollars a barrel in July. Now it's around 106 dollars a barrel. At the same time, local, gasoline prices have dropped up to 75 cents a gallon. And Case says it looks like they will keep dropping.

"Clearly in the short run we're headed lower. Now if that means 350 versus 380 right now that's hard to say but the trend is lower right now."

High fuel prices lead to surcharges from trucking companies that forced retailers to increase the price of just about everything. With fuel prices dropping, Case says other prices should dip as well. Eventually. "It always seems prices rise faster than they fall."

There's a limit to the drop though. OPEC countries don't want oil to drop below one hundred dollars a barrel, and are already cutting production, to keep supplies tight, and the prices higher than they should be.

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